2014 (11) TMI 834 - AT - Service Tax

Business Auxiliary Service - Penalty u/s 76 & 78 - Held that - Equal amount of penalty under Section 78 of the Finance Act has been imposed and the learned Commissioner (Appeals) has dropped the penalty under Section 76 on the ground that once penalty under Section 78 is imposed, penalty under Section 76 is not justified, as held by the Hon ble Punjab & Haryana High Court in the case of CCE vs. First Flight Courier Ltd. reported in 2011 (1) TMI 52 - High Court of Punjab and Haryana - it appears that the Commissioner (Appeals) has rightly waived the penalty under Section 76 in the light of the decision of the Hon ble Punjab & Haryana High court cited supra. Hence I do not find any infirmity in the impugned order - Decided against Revenue.

Summary

Issues:
Imposition of penalty under Section 76 of the Finance Act for failure to pay the entire service tax amount before the issue of show cause notice.

Analysis:
The appeal was filed by the Revenue against an order imposing a penalty under Section 76 of the Finance Act. The respondent had provided business auxiliary services involving a service tax amount of Rs. 1,39,847, which was paid along with interest and not disputed. The Revenue argued that since the entire service tax amount was not paid before the show cause notice, penalties under both Section 76 and Section 78 should be imposed. The Commissioner (Appeals) upheld the penalty under Section 78 but dropped the penalty under Section 76.

On review, it was noted that the Commissioner (Appeals) waived the penalty under Section 76 based on the decision of the Hon'ble Punjab & Haryana High Court in a similar case. The High Court held that Section 78, which deals with suppressing taxable value, is more comprehensive and provides for a higher penalty amount. Therefore, if a penalty is imposed under Section 78, imposing a penalty under Section 76 may not be justified. The Tribunal concurred with this reasoning and found no fault in the decision of the Commissioner (Appeals).

In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the waiver of penalty under Section 76 in line with the precedent set by the Hon'ble Punjab & Haryana High Court. The judgment highlights the importance of considering the scope and implications of different penalty provisions under the Finance Act before imposing penalties for non-compliance with tax obligations.